MATT WORDSWORTH: The new Prime Minister has ramped up the rhetoric over asylum seeker policy raising the prospect of military conflict with Indonesia if the coalition is elected. In an attempt to counter the Opposition's repeated claim that it would turn back the boats Kevin Rudd said that policy could escalate from a diplomatic spat with Indonesia to a confrontation. The Coalition reacted furiously saying the statement was reckless. As political editor Chris Uhlmann reports the re-booted Prime Minister is moving quickly to try to rebuild Labor's fortunes.

(FOOTAGE OF ASYLUM SEEKER BOATS)

CHRIS UHLMANN: The endless procession of asylum seeker boats has overwhelmed Australia's border protection regime. In the six years Labor's been in power the unwinding and rebuilding of the Howard Era Pacific Solution has been one of its major policy backflips. But the tougher stand has not slowed the boats. 278 came last year carrying over 17,000 passengers. The flow is greater this year. It has been one of the Opposition's major weapons.

TONY ABBOTT, OPPOSITION LEADER: We did stop the boats in the past, we will stop the boats in the future, but it is going to take a Coalition Government to fix this problem.

CHRIS UHLMANN: With Labor now aping most of the Coalition's policies just about the only significant point of difference is this.

TONY ABBOTT: And turning boats around where it is safe to do so.

CHRIS UHLMANN: But given the boats would be sent back to Indonesian water's that nation's government has consistently rejected the Coalition's boat turn back plan.

NADJIB RIPHAT KESOEMA, INDONESIAN AMBASSADOR: It's not possible for the coalition to say it has to go to Indonesia, back to Indonesia because Indonesia is not the origin country of these people.

CHRIS UHLMANN: It was a theme the newly minted Australian Prime Minister was keen to explore in his first press conference.

(PRESS CONFERENCE 28/06/2013)

KEVIN RUDD, PRIME MINISTER: I'm very concerned about whether Mr Abbott were to become Prime Minister and continues that rhetoric and that posture and actually tries to translate it into reality I really wonder whether he is trying to risk some sort of conflict with Indonesia.

(CHRIS UHLMANN ASK QUESTION AT PRESS CONFERENCE)

CHRIS UHLMANN: You used the term risking conflict with Indonesia and asked us to consider the history. Are you talking about the possibility that that policy would raise armed conflict with Indonesia or do you want us to think about something else?

KEVIN RUDD: No no what I'm talking about is diplomatic conflict but I'm always wary about where diplomatic conflicts go. Konfrontasi with Indonesia evolved over a set of words.

CHRIS UHLMANN: Konfrontasi was the undeclared war between Indonesia and Malaysia that ran for three years from 1963. Australia fought with British troops on the Malaysia's side. Twenty three Australians died and eight were wounded but it got hardly any coverage here because it was so sensitive. In fact it was a triumph of diplomacy because Australia and Indonesia maintained diplomatic relations when their armed forces were exchanging fire. So, for a Prime Minister who says he knows his history there is no doubt what he was suggesting today. A vote for Tony Abbott risks war with Indonesia.

KEVIN RUDD: So what happens on day one when Field Marshall Tony put out the order to the captain of the Australian Naval frigate x to turn back a bunch of boats and you've got naval frigate from the Indonesian navy on the other side of the equation. I'm simply putting a spotlight on a direct policy conflict.

CHRIS UHLMANN: The response from the Opposition was immediate and furious.

JULIE BISHOP, DEPUTY LIBERAL LEADER: It is utterly irresponsible and wreckless for the Prime Minister of this country to try and use our bi-lateral relationship with Indonesia for base domestic political purposes. It is a massive over-reach, it is a shocking diplomatic gaffe and he should retract it before he does any more damage.

CHRIS UHLMANN: And an old Coalition warhorse charged into the fray.

ALEXANDER DOWNER, FORMER FOREIGN MINISTER: Now what Mr Rudd is essentially saying is if people vote for the Liberals at the next election there's a real prospect of war with Indonesia now this is a terrible thing to suggest.

CHRIS UHLMANN: Kevin Rudd desperately needs to turn around Tony Abbott's border security attack because it's crippling Labor. And it's reasonable to point to the obvious diplomatic hurdle in the Coalition's path. But what the Prime Minister did today drags Indonesia even deeper into an Australian domestic brawl. And it comes just a week before the annual leaders meeting with the Indonesian President. So it's reasonable to question the wisdom of this political play. But Kevin Rudd says it's not just war that Australia risks with Tony Abbott.

KEVIN RUDD: Let me say this very bluntly. He will tip Australia into recession and bring about significant unemployment and what I know from economic history in this country is once you've done that it takes so long to get people back.

CHRIS UHLMANN: Kevin Rudd says he's a changed man.

KEVIN RUDD: If I have learnt one thing from my previous period as Prime Minister and I've learnt quite a lot from my previous period as Prime Minister, one of the things I have learnt is the absolute importance of proper orderly consultation with Cabinet colleagues on any major decision of the Government.

CHRIS UHLMANN: But the Coalition is keen to recall Kevin Rudd's past. A rollcall of its luminaries addressed a staged party room rally today in front of a new election slogan.

JOE HOCKEY, SHADOW TREASURER: And he's back. Kevin's back. He was the most wasteful and the biggest spending Prime Minister in Australian history

JULIE BISHOP: Here we go again, yet another Labor leadership brawl where the winner emerges demanding others be kinder and gentler while the political blood of their opponent is still dripping from their hands.

KEVIN RUDD: And one of the punch lines is that Kevin Rudd supercharged asylum seeker arrivals when he dismantled the Pacific Solution in 2008.

TONY ABBOTT: I'm not being negative. I am simply being factual when I say that Kevin Rudd is the best friend that people smugglers have ever had.

CHRIS UHLMANN: The Cabinet is yet to be settled and will be sworn in on Monday. While saying it will be consulted about all policy some changes are on the cards. The Gillard Government's education reforms will be kept but the deadline for the States to sign on will be extended.

KEVIN RUDD: I'm just a reasonable guy and so you walk in the door and you shake someone's hand and say ok this is for the nation's good what can we do about it?

CHRIS UHLMANN: Without giving detail Kevin Rudd also flagged revisiting the carbon tax and reconsidering the cuts in benefits to single mothers. And the recent convert to the idea of same sex marriage floated a way of lifting pressure on Parliament to change the law.

KEVIN RUDD: Other mechanisms including the possibility of recourses to plebiscite a referendum, including the possibility.

CHRIS UHLMANN: And as the Prime Minister finished, the marathon Senate sittings rolled towards an end. Tired Senators were getting a little testy.

SEN. MICHAELIA CASH, LIBERAL BACKBENCHER: I wonder how loud former Prime Minister Gillard screamed when her own sisterhood knifed her in the back and took her out. Minister Wong who's now sitting reaping the spoils of the victory, drinking from the chalice of blood her own sisterhood took her out.